Parliament passes banking bill, more banks soon

New Delhi: Parliament on Thursday paved the way for corporate houses to enter the banking sector by approving the banking bill, a key reform legislation pending for long. Parliament also passed the amendments to the debt recovery laws or Sarfesi law after a reply by Finance Minister P Chidambaram on the combined discussion on the two bills in Rajya Sabha.

These two Bills -- Banking Laws (Amendment) Bill, 2012, and Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2012, -- he said, will strengthen the financial sector and help in establishing large-sized banks, besides promoting financial inclusion.

Parliament also passed the amendments to the debt recovery laws after a reply by Chidambaram on the combined discussion on the two bills in Rajya Sabha.

"We need 2-3 world-sized banks. China has three among the world's top 20. We have none. We need more banks," he said. "Banks have opened 6,489 branches in 2011-12 alone, that is around 18-19 per day. We don't have the capacity to open more branch. We need banks," he said.

The Lok Sabha had already passed these two Bills. Chidambaram said the amendment was not intended to give banking licences to big corporate houses alone, but also to allow eligible public sector entities to enter the sector. The Banking Bill was approved by the Lower House earlier this week after the government dropped the controversial clause concerning allowing banks to trade in commodity futures.

Referring to Thursday's strike by bank unions against reforms, Chidambaram said he could only request the bank employees to refrain from such activities.